NEW YORK: U.S. consumer prices increased in July for the sixth straight month, suggesting mild inflation pressure is building in the economy.
The consumer-price index, which reflects what Americans pay for everything from razors to rent, rose a seasonally adjusted 0.1% in July from a month earlier, the Labor Department said Wednesday. Excluding volatile food and energy categories, so-called core prices also increased 0.1%.
Economists surveyed by The Wall Street Journal expected both measures to increase 0.2% last month.
Compared with a year earlier, overall prices rose 0.2%. That is a small increase but marks the second straight month of year-over-year price gains after the annual index failed to advance from January through May. Core prices were up 1.8% from a year earlier. The annual change in core prices have held near that level since March.
July’s increase was led by rising housing costs. Shelter prices, the largest component of the index, rose 0.4%, the largest monthly increase since February 2007. Shelter prices are up 3.1% from a year earlier.
Energy prices edged up 0.1% last month. Gasoline prices increased a seasonally adjusted 0.9%, offsetting declines in all other major components of energy prices. But from a year earlier, gasoline prices are down 22.3%.
Oil prices began to fall sharply in the middle of last year causing gasoline prices to plummet. A year later, gasoline costs may be stabilizing, peaking for the summer in mid-July at $2.92 for a gallon of regular and declining modestly since then, according to the U.S. Energy Information Administration.
However, crude oil prices have fallen since early July, which could put further downward pressure on gasoline prices later this year.
Food prices were up 0.2% last month and rose 1.6% from a year earlier.
A stronger U.S. dollar could be playing a role in holding back consumer prices by making imported goods relatively more affordable.
Prices for some goods that are typically imported fell last month. For example, toy prices fell 0.5% from June and home furnishing prices fell 0.2%. However, apparel and footwear prices rose in July.
An economic slowdown in China and Europe has also curtailed global demand, which can limit price increases.
The Federal Reserve is looking for inflation to firm gradually as it considers when to raise short-term interest rates for the first time since 2006. Central bank officials have indicated they could start lifting rates as early as September, despite very mild inflation.
“I expect convincing evidence to emerge that inflation is rising to a safer level and approaching our 2% target,” Atlanta Fed President Dennis Lockhart said in a speech this month.
The Fed’s preferred inflation gauge, the price index for personal consumption expenditures, has undershot the target for three years. Persistently low inflation is a worry for the economy because it can slow the pace of wage increases and make it more difficult for households and businesses to pay off debts.
A separate Labor Department report showed American’s inflation-adjusted weekly earnings rose 0.4% in July. The increase reflects only slight inflation and increase average hourly pay and hours worked.
But from a year earlier, real average weekly earnings fell 0.1%.
